👚Resale is Real Real. Eff “The Amazon Effect.”👚

The #RetailApocalypse is More Than Amazon Inc.

The force is strong.gif

In September 2017 in “Minimalistic Consumption by Inheritance,” we wrote:

Much has been made about the death of retail and the "Amazon Effect." We mention it quite a bit … but we are also on record as calling the Amazon narrative lazy. After all, there's a reason why resale apps are among the highest downloaded apps in the Itunes app store. We've noted this before: millennials have no problem buying, reselling, buying, and reselling. I mean, sh*t, we're now seeing commercials for OfferUp on television. We've noted the rise of Poshmark and other apps here and here. Perhaps there's more here than meets the eye.

We doubled down with “Enough Already With the ‘Amazon Effect’” in April 2018. Citing the ThredUp 2018 Resale Report, we noted:

…the resale market is on pace to reach $41 billion by 2022 and 49% of that is in apparel. Moreover, resale is growing 24x more than overall apparel retail. “[O]ne in three women shopped secondhand last year.” 40% of 18-24 year olds shopped resale in 2017. Those stats are bananas. This comment is illustrative of the transformation taking hold today,

“The modern consumer now has a choice between shopping traditional retail or trying new, innovative business models. New apparel experiences and brands are emerging at record rates to replace old ones. Rental, subscription, resale, direct-to-consumer, and more. The closet of the future is going to look very different from the closet of today. When you get that perfectly curated assortment from Stitch Fix, or subscribe to Rent the Runway’s everyday service, or find that killer handbag on thredUP you never could have afforded new, you start realizing how much your preferences and behavior is changing.”

Finally, we wrote in January — in “ Retail May Get Marie Kondo'd ,” — that the Force is now strong(er) with the resale trend.

We concluded:

The RealReal is signaling that resale is so big that it’s ready to IPO. Talk about opportunistic. No better time to do this than during Kondo-mania. The company has raised $115mm in venture capital … most recently at a $745mm valuation.

None of this is a positive for the likes of J.C. Penney. They need consumers to consume and clutter. Not declutter. Not go resale shopping. We can’t wait to see who is first to mention Marie Kondo as a headwind in a quarterly earnings report. Similarly, we wonder how long until we see a Marie Kondo mention in a chapter 11 “First Day Declaration.” 

So, where are we going with all of this?

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Enough Already With the “Amazon Effect”

Resale and Micro-Brands Are a Big Piece of the Retail Disruption Story

Let’s start with this SHAMELESS Law360 piece (paywall) which doubles as a promotional puff piece on behalf of the private equity industry. Therein a number of conflicted professionals go on record to say that private equity has taken far too much flack for the demise of retail. The piece is pure comedy…

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Minimalistic Consumption by Inheritance

Much has been made about the death of retail and the "Amazon Effect." We mention it quite a bit in our awesome kick-a$$ weekly PETITION newsletters (which you can subscribe to here). But we are also on record as calling the Amazon narrative lazy. After all, there's a reason why resale apps are among the highest downloaded apps in the Itunes app store. We've noted this before: millennials have no problem buying, reselling, buying, and reselling. I mean, sh*t, we're now seeing commercials for OfferUp on television. We've noted the rise of Poshmark and other apps here and here. Perhaps there's more here than meets the eye.

Baby boomers are retiring in droves now and, along with retirement (and creaky knees), comes downsizing. Many are moving into retirement communities and ditching the two-story suburbian house they filled with decades worth of nonsense. As pointed out recently by the New York Times, millennials don't want a lot of their parents' hand-me-downs. So a lot of it is going to Goodwill

We expect this trend will continue for the short-term. That said, 90s clothing is back again and so it's only a matter of time before 60s and 70s vintage returns too. When that happens, those dumbass kids will regret turning away their parent's wares. 

Getting Creative With Some Brick and Mortar

Three weeks ago we wrote a feature (with a pathetic title - not our strong suit) that introduced you to the concept of ghost restaurants. To refresh your recollection, these were restaurants with no real physical location - just some branding, space in a commercial kitchen (like the co-working space unicorn WeWork, but co-cooking kitchen space for chefs), and a distribution mechanism like Seamless. The benefits of this concept are obvious: quick experimentation with food concepts, cross-pollination of food stuffs between different concepts, and avoidance of expensive and fixed long-term duration rentals, among other things.

Why doesn't WeWork for physical consumer products exist then? Well, now it does. In two discreet neighborhoods in New York, anyway (SoHo & Wiliamsburg). A new Y-Combinator backed startup, Bulletin, is a new platform matching up smaller brands with consumers with physical retail space. Rather than specialty retailers taking on expensive leases to display a few select racks of wares, they can simply rent a single sub-section of a larger retail shop on a month-to-month basis. Low friction, zero long-term overhead, mucho flexibility. 

Outsourcing rent exposure to Bulletin is even better considering that the brands otherwise maintain autonomy; they choose the products to display, deploy their normal price-points and coach the Bulletin-provided salesperson on how best to market and/or demonstrate their products (some risk on that last part, we'd think, but whatever). Bulletin alleges that the whole setup process can be done in 5 days or less.  Query whether a hypothetical brand has any control over whether its wholesome plush children's dolls are situated next to some dude named Lion's rad display of custom bongs, but that's for the brands to safeguard, not us. Perhaps there's some hipster version of co-tenant clauses? Regardless, on the consumer side of things that would be a wildly comical combination: just the right kind of humor and smorgasbord-like experience to get customers returning to the space. It's like an upscale branded flea-market. Throw in some craft beer made out of spider piss and there may just may be lines around the block. 

In a time when leases are the largest albatross weighing down retailers (well, other than billions in debt and dividend recaps), we welcome innovative and creative physical structures that aspiring brands can take advantage of. Most successful retailers these days are leveraging digital platforms - whether that's Amazon, Alibaba, Ebay or Etsy. Or - if you're half the average age of this newsletter's readership - Poshmark. SOME kind of brick-and-mortar has to work, right? Will Bulletin be the model? We've got no clue. But we welcome the attempt.